Luxembourg flags crypto companies as high risk for money laundering

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Ah, Luxembourg! The tiny country that’s apparently waving a big red flag at virtual asset service providers (VASPs) like a parent at a school play, shouting, “Watch out for those money launderers!” In its 2025 National Risk Assessment (NRA), Luxembourg has officially classified these digital darlings as high-risk entities. Who knew crypto could be so scandalous? 💸

According to the report, the risk level of VASPs is “High.” This is driven by a cocktail of factors: transaction volume, client reach, distribution channels, legal structures, and the international scope of operations. It’s like a game of Monopoly gone wrong, where everyone is trying to launder their way to Boardwalk. 🏦

In 2020, the NRA had a lightbulb moment and identified VASPs as an emerging risk after a “detailed assessment of ML inherent risks emerging from virtual assets.” Fast forward to 2022, and they were practically screaming, “The risks associated with crypto assets are very high!” because, let’s face it, they’re internet-based and cross-border—like that one cousin who always shows up uninvited. 🌍

EU’s evolving crypto regulation

The EU, of which Luxembourg is a founding member, has been busy trying to put a leash on the cryptocurrency industry. Enter the Markets in Crypto-Assets (MiCA) framework, designed to unify crypto regulation across all 27 EU member states. Because nothing says “we care” like a bureaucratic framework, right? 📜

Since January, crypto asset service providers have been scrambling to acquire licenses to operate legally within the EU. This includes the cryptocurrency exchange Kraken, which has launched regulated derivatives trading, and its competitor Crypto.com, which has also secured a license. It’s like a race to see who can follow the rules the fastest! 🏁

MiCA also introduces a new set of requirements for stablecoins. However, Tether, the stablecoin market leader behind USDt (USDT), has decided to play hard to get and refuses to comply with the new rules. As a result, it was delisted on Crypto.com, Coinbase, and Binance. Talk about a digital breakup! 💔

Money laundering with crypto

As cryptocurrencies become more popular, so does their use for money laundering. Earlier this month, Hong Kong police arrested 12 people involved in a cross-border money laundering scheme that relied on crypto and over 500 stooge bank accounts to launder a whopping 118 million Hong Kong dollars (that’s about $15 million). Who knew laundering could be so lucrative? 🧼

Crypto laundering image

In another twist, European law enforcement arrested 17 suspects of a “mafia crypto bank” for allegedly laundering over 21 million euros ($23.5 million) in crypto for criminal entities based in the Middle East and China. As a result, they seized 4.5 million euros ($5 million) worth of items, including cash, crypto, 18 vehicles, four shotguns, and several electronic devices. It’s like a scene from a bad crime movie, but with more spreadsheets! 🎬

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2025-05-27 13:56